What are the implications if finances aren't tracked?
As we saw in the previous step, there is a lot of responsibility attached to the management of finances on construction projects. This is because there is a high level of risk if things go wrong.
When finances are left untracked, it is difficult to monitor the progress of the business. The project manager is unable to see the true financial status of the business and can’t plan for any changes that may need to be made.
Construction businesses also receive funds from many sources to run projects. Without keeping track of project finances, the project manager will be unable to identify where these sources of income are coming from.
It’s also impossible to prepare accurate financial statements or prepare a tax return. An up-to-date record of project finance must demonstrate income, expenses and credits.
In the next step, and later in the course, we’ll explore a couple of case study examples demonstrating how financial management errors can lead to business collapse.
Think about your experiences working on projects. Are there any for which you feel the financial management could have been improved, and in what way?
If you don’t have any personal experience on a project, think about one you may have heard about in the news.
Share your thoughts with your fellow learners.
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